Standing Committee E

[Mr. Win Griffiths in the Chair]

Health and Social Care (Community Health and Standards) Bill

Clause 137 - Liability to pay NHS charges

Chris Grayling: I beg to move amendment No. 626, in
clause 137, page 59, line 14, after 'person', insert 
 'other than any NHS organisation or employee, including General Practitioners,'.
 I am delighted, and indeed relieved, to see the Minister of State in his place as the only survivor of the old team; I wondered whether any of them would remain after the reshuffle. 
 I seek your guidance, Mr. Griffiths, before beginning this part of the debate. Clause 137 addresses a substantial issue, and the Opposition intend to debate it as a clause and to seek your leave to divide the Committee on it. Given the nature of the amendments, it may be logical to address the issues in a clause stand part debate at the beginning rather than the end of such a debate because subsequent amendments will effectively follow on from those issues. Will you permit the debate on amendment No. 626 to range into a clause stand part debate so that, first thing this morning, we can set up some of the issues for subsequent amendments?

Win Griffiths: I am happy to do that, provided that when discussing subsequent amendments we are careful to keep strictly to the subject matter. Having said that, I am happy to let the debate on amendment No. 626 range widely. I hope that no one will complain that they have not had a chance to speak in a clause stand part debate. Now that all members have heard what I had to say on that, we will proceed.

Chris Grayling: I am grateful. That will help the shape of this morning's debate, and I am happy to be guided by you about the nature of the debate on subsequent amendments.
 Amendment No. 626 addresses one of the issues in this part of the Bill about which the Opposition are concerned. Those concerns range across several different dimensions, one or two of which we shall return to when we discuss subsequent amendments. The greatest concern is the impact that the measure will have not simply on GPs—I will talk later about its impact on the health service—but on employers generally. 
 This part of the Bill will establish the principle that employers and anyone liable to pay compensation as the result of an incident will be liable also to meet part of the victim's national health service treatment costs. Amendment No. 626 singles out one group—the health service itself—that will be adversely affected 
 by the introduction of these measures. However, that adverse impact will extend more widely. 
 For that and other reasons, we are profoundly concerned about that part of the Bill. The Opposition tabled a series of amendments, which I appreciate cannot be called under the rules of the Committee but which, clause by clause, deleted that part of the Bill. I want to set out the reasons for that with regard to amendment No. 626 and some of the clause stand part issues. 
 This part of the Bill is problematic because of the impact that it will have on the various forms of liability insurance that different groups in society are obliged to take out—or would normally take out—to protect themselves against third-party claims. Those groups could include employers; employers' liability insurance is routine for an employer. Medical practitioners could also be included because, as amendment No. 626 states, they are increasingly required to, and must, take out insurance against claims for negligence, mistakes and so forth. 
 As we will see in a subsequent amendment, liability insurance can apply to small sports clubs, other voluntary organisations and charities. Frankly, Mr. Griffiths, it applies to any householder taking out household insurance, because there is a public liability element in most such policies. 
 As sure as night follows day, a consequence of this part of the Bill will be that insurance premiums rise, as it will introduce to the insurance industry an additional potential element of liability. No longer will a claim in court simply provide compensation to an individual; the cost to the national health service of treating the person who has been affected by the circumstances that led to the claim must also be considered. There are huge bureaucratic implications, which we will talk about when we discuss subsequent amendments. 
 However, the real problem is what this measure will do to those areas of liability insurance that have been a particular problem in recent years. By any measure, employers' liability insurance must be top of that list of problems. It affects all kinds of organisations and people; schools, GPs, hospitals and businesses. It affects anyone in the public and private sectors who employs others. However, the real impact will be felt by hard-pressed, smaller businesses.

Andrew Murrison: Is my hon. Friend aware that, in a written parliamentary answer, the Secretary of State for Trade and Industry admitted to me that 5 per cent. of businesses feel that employers' liability insurance is becoming a show-stopper as far as their future economic viability is concerned?

Chris Grayling: My hon. Friend has made an extremely important point, and I intend to give the Committee the Government's own information about the employers' liability problem. I shall then ask Ministers why the Government is apparently heading in two separate directions on this issue.
 You will be aware, Mr. Griffiths, that the Department for Work and Pensions recently 
 published a very detailed report and set out a strategy to consult on and study employers' liability insurance in order to work out, before the Bill comes into effect, how best to solve the current problem. The Bill throws a great rock into the pool of that process, making it much more difficult to establish a way forward for employers' liability insurance, quite apart from the impact that it will have on large and small firms up and down the country. 
 The issue is straightforward, and I shall draw significantly on the Department for Work and Pensions' own study of the matter. Of the costs of employers' liability insurance for smaller businesses, the Department said that 
''as a proportion of profits they can be significant, particularly in sectors where above-average premium growth seems to be occurring and in small and medium sized enterprises (SMEs), which generally pay a higher proportion of turnover in EL insurance than larger firms.''
 The measure will have a particularly adverse impact on smaller businesses at a time when they face pressures from all directions. 
 The problem is that, over the past two or three years, there has been a huge jump in the level of employers' liability insurance. That has partly been a result of the international situation, but has also been a consequence of changing assessments of risk. Increasingly, we live in a compensation culture. More and more people want to take companies, doctors and their local hospitals to court. People will take a school to court if their child breaks an arm in the playground. We are becoming a more litigious society and, consequently, the cost of those insurance policies has been rocketing in recent years. 
 The Department for Work and Pensions' own figures state that 
''Zurich Insurance, the Association of British Insurers (ABI) and the British Insurance Brokers Association (BIBA) say that the average increase in EL premiums across all types of risks over 2002 was between 40% and 60%. Norwich Union has estimated its own average increase in EL to be slightly lower at 30% to 45%.''
 However, that is still a huge jump in a single year. That has been confirmed by the Office of Fair Trading, which has also been looking at this area. It carried out a survey of approximately 450 small businesses, which showed that during 2002, two fifths of businesses experienced an annual increase of more than 20 per cent. The employers' liability costs of one in eight businesses more than trebled, an increase of 200 per cent. or more. Those are enormous increases. 
 The picture has been particularly bleak in individual sectors. The DWP refers to two sectors in particular, one of which is construction. The Department of Trade and Industry carried out a survey of the construction sector, which reported that employers' liability insurance premium increases ranged from 10 per cent. to 368 per cent. That is a huge figure. 
 The National Federation of Roofing Contractors carried out an insurance survey covering the period 2001–02. Employers' liability premiums rose by an average of 161 per cent. between 2001 and 2002. In 
 many cases, these companies have not been making claims. They have been good stewards of their employees and have not had to make any payouts to them. However, due to the growth in litigation across our society and the impact post–11 September, premiums have been jumping. 
 An employer in my constituency—a car park operator who ran car wash services in car parks across the country—came to see me. His insurance premiums had risen beyond all measure. He was having difficulty getting the premiums that he had had in the past, even though nobody could say that his policy was related in any way to the international situation. His business was not exposed to terrorism. However, he had to face huge premiums, which came off his bottom line. 
 The purpose of explaining this is to demonstrate that small businesses are already suffering a huge additional burden in employers' liability insurance. The measure in the Bill will add an additional layer of costs. The Association of British Insurers estimates an 8 per cent. increase in employers' liability premiums. However, it may be much more for many firms depending on their sector. Smaller businesses are particularly liable to find that even a relatively small increase in premiums will have a significant impact on their business. 
 That is the nub. The total cost of the employers' liability insurance premium may be a sizeable proportion of the overall turnover, let alone the profitability, of a relatively small business that turns over a few hundred thousand pounds. The DWP highlighted the example of a scaffolding firm that employs seven people and has a turnover of £300,000. It reported a rise of 500 per cent. in its combined employers' liability and public liability insurance costs over two years. The premium in 2000 was £6,000, which rose to £10,000 in 2001 and to £30,000 in 2002. That business is paying 10 per cent. of its £300,000 turnover in employers' liability premiums. 
 By adding another set of increases on top of that premium, I expect that the business would struggle to make a profit. Some 8 per cent. of that £30,000—£2,400—probably represents a significant proportion of that company's remaining profit margins and could even wipe out its margins altogether. That is money that cannot be spent on other things and perhaps, as a result, the company might have to employ one person fewer. That £2,400 may mean the difference between having a bit extra that enables them to have one extra person on the books and not being able to do so. 
 Small businesses—small manufacturing businesses and small service businesses such as that scaffolding firm—cannot afford to take on additional costs in this way. Mr. Griffiths, you will know from the experience of companies in your constituency that many firms are currently finding it difficult to survive. It is a difficult economic climate, and the last thing that they need is yet another increasing cost. The consequence of introducing the measure will be to reduce employment and erode profit margins and to make it more difficult for those companies to survive and 
 flourish. The measure in clause 137 is a tax on business, and it will also be a tax on the public sector and on voluntary groups, all of which will have to meet the additional costs of insuring against the risks that they face day by day. 
 The smaller businesses will suffer; indeed, the Department for Work and Pensions itself admits in its report that larger companies tend not to be so badly affected. One of the reasons for that is that insurers can do detailed risk assessments of individual substantial businesses, because such businesses are big enough to make full risk assessments worthwhile. However, that is not the case with smaller businesses, for whom it is simply not cost effective to carry out detailed individual assessments. The Department for Work and Pensions itself says: 
''Insurers state that generally it is not economically efficient for them to fully assess a smaller company's health and safety practices, by way of a liability survey, and to link the results to premium charged.''
 The small firms get lumped together and get a big increase, and cannot demonstrate that they are not risky operations. The measure will be a tax on smaller businesses from which they cannot escape because, by law, they have to have this insurance. They will have to pay the bill at a time when they can ill afford to do so. 
 Mr. Griffiths, you will not be surprised to learn that the various groups representing these organisations—medical practitioners, employers and small businesses—are all deeply unhappy with this element of the Bill. The Federation of Small Businesses, apart from raising several specific concerns, sets out many ways in which this measure will have an impact on business. The FSB highlighted issues to which we will return during debates on the amendments in relation to legal costs and some of the settlement frameworks. Overall, it is deeply unhappy with the potential impact on smaller businesses. 
 The Engineering Employers Federation says that the scheme will not work, that it will damage businesses and that it will have an adverse impact. The federation is profoundly concerned about the scheme, saying: 
''The estimated amount of costs recovered will be in the order of £100 million. While this represents a relatively insignificant amount to NHS funding, it is in effect a tax on British Industry. This will be felt most keenly in the so-called higher risk areas such as manufacturing, which is currently suffering some of the worst trading conditions experienced in the last ten years.''
 I now turn to the matter of medical practitioners. The purpose of the amendment is to make a point to the Government and to seek to exclude medical practitioners from this process. We will end up with the NHS in a merry-go-round of claiming against itself. The first and most immediate impact is that it will raise the cost of liability insurance for medical practitioners themselves. We will then have a situation in which GPs will be seeking to recover costs from hospitals and hospitals will be seeking to recover costs from other hospitals when treatment does not work. 
 We all know of people who have come to see us because the care that they have received in the NHS has not worked for some reason, or because something has gone wrong. The Minister will recall that, in the 
 Chamber a few months ago, I referred to the fact that a recent study in the British Medical Journal said that one in ten patients in hospital suffers from an adverse event. That might be picking up an infection or, for an elderly person, falling out of bed and breaking a bone. In many cases, the outcome of those adverse events is a claim for financial compensation. We will see medical practitioners not only pursuing claims against each other, but being pretty much obliged to do so. 
 A GP who treats a patient who has been treated wrongly at hospital, will, under that section of the Bill, have to claim the cost of treatment back, through the compensation system, from the hospital that did not do the job properly in the first place. There is a risk of a merry-go-round of claims within the NHS, which will create bureaucracy and tension and push up costs. That will have an adverse effect and create more of a blame culture within the NHS at a time when Ministers are rightly exploring the possibility of a blame-free system of compensation. This measure will require medical practitioners, effectively, to challenge each other's word in order to try to recover funds. The Minister must have seen the submission from the Medical Protection Society on this, which states that 
''In practice, these proposals are likely to set GPs and hospital doctors against each other, which will be bad news for hospitals and patients alike. Mistakes made in hospitals will be dealt with by the trust management and the NHS Litigation Authority, but for GPs the effects of the recovery of hospital costs scheme will be much more personal. A GP working long hours for the NHS, who is sued by a patient for delay in diagnosing a condition that was subsequently picked up by A&E and treated in hospital, could be liable to pay tens of thousands of pounds to the hospital.''
 To prevent that potential risk from turning into a real personal liability case for a GP, the GP will have to push up his or her level of insurance and pay higher premiums. 
 One area highlighted in the report carried out by the Department for Work and Pensions was long-term occupational disease. I will keep my remarks on that brief, as we will touch on it when dealing with subsequent amendments. However, it is worth making the point that one issue that the insurance industry will have to address if that section of the Bill comes into force is future risks, such as asbestosis, illnesses suffered by coal miners who spent years under the ground and, interestingly—given the debates that we have had on Wales—specific diseases that apply to the slate mining industry. The industry will also have to address the successors of those conditions; for example, repetitive strain injury or conditions of which we are yet unaware. 
 Insurance companies will have to look into the future to assess what the situation will be with regard to asbestosis, or its equivalent, in 20 years' time. What will the potential, hidden liability be at an indeterminate time in the future? How will insurance companies make provision for that? Dealing with asbestosis and other long-term conditions that arise from certain workplaces will involve huge costs over many years. Insurance companies must also take that into account when establishing premium costs. That will compound the situation in some sectors in which the insurance industry judges that there is a particular risk. 
 The great irony is that the Government are well aware of the problem that is being created for employers of all shapes, sizes and descriptions as a result of the liability insurance issue. The Department for Work and Pensions report is meant to be part of a long-term, ongoing project to try to identify ways of mitigating the impact of surging insurance costs on individual employers of whatever kind. It has identified several areas in which it is working with business and industry to evaluate the evidence in order to separate long-term occupational disease risks from accident risks. That work is ongoing. 
 The Department is working with stakeholders to maximise the benefits of current initiatives within the legal system, such as how to reduce the costs of settlements, how to make the process of claiming less litigation orientated and how to reduce legal bills. It is considering ways of making rehabilitation play a more central role in the UK workers' compensation system, and it is considering reforming the arrangements for enforcing employers' liability in order to deal with those organisations that slipped through without taking out insurance. There is a comprehensive programme, with a detailed document. Having read the work that is being carried out by the Department for Work and Pensions, I must say—as a genuine compliment—that it has recognised the significance of the issue and is trying to do something about it. 
 During a thoughtful process to tackle a substantial issue for smaller commercial organisations in particular, but also for a wider range of organisations, why does the Department of Health—demonstrating absolutely no signs of joined-up government—throw an almighty rock into the pool by saying that it will change the compensation system and allow the NHS to recover costs in a way that will place a huge additional burden on smaller businesses? That would complicate the review process that is designed to ease the existing burden on smaller businesses, and it would create complexities and problems in the NHS because of how the compensation system operates within it. 
 It is absolutely the wrong moment to be doing that. It is the wrong time as regards the process and it is certainly the wrong time to be levying an additional £100 million of taxation on smaller businesses. It is mad. It is certainly not right to do it before the Department for Work and Pensions has reached a resolution about possible changes to the liability and insurance structure. Surely this part of the Bill should be set aside. 
 The Department of Health should be engaging in the ongoing discussion and debate between the Department for Work and Pensions, business groups and other organisations. If the Department of Health really wants to come up with a package of proposals, it should do so, eventually, as part of a more comprehensive new structure for employers' liability insurance. Surely that is the logical way to do it. It is absolutely the wrong time to be putting forward this part of the Bill. It is an unwanted tax at a difficult economic moment, and it will make very little 
 difference because, as the Engineering Employers Federation pointed out, in the context of the overall NHS budget, £100 million is a drop in the ocean. 
 We expect the overall NHS budget in the next couple of years to be close to £100 billion. Although £100 million will make very little difference to the NHS, it will make a major difference to small businesses at a time when they can ill afford it. This is the wrong time to do it; it is a tax on jobs and business, and we strongly oppose it.

Win Griffiths: Further to what I said about this being an opportunity for wider debate—there will be no clause stand part debate—I will still rule out of order what I feel to be repetition if an argument has been well set out. Although Members who have yet to speak might want to say ''with reference to'', and then give an example, I do not want the entire argument to be repeated at length.

Paul Burstow: I shall take your guidance as it was intended, Mr. Griffiths.
 In his response, I want the Minister to talk the Committee through the process that the Government went through in coming to the decision that was announced last week by the Department of Trade and Industry, which implied that a different approach would be taken to the implementation of this part of the Bill. My understanding was that a DTI Minister suggested last week that provisions in respect of this part of the Bill, which deals with NHS cost recovery, would not be implemented until the Government's work on the employers' liability compulsory insurance was completed. It would be useful to hear from the Minister precisely what that meant. 
 The hon. Member for Epsom and Ewell (Chris Grayling) has already outlined work that is currently in train to inform the Government in respect of how we restore confidence and ensure that that there is a stable insurance market to deal with public and employer liability issues. It is clear, as has already been outlined, that there are serious issues concerning a shortage of supply and, as a consequence, a substantial increase in premiums. 
 It would, therefore, be useful for the Minister to tell us whether the intention is to secure and implement this part of the Bill when research and work are complete, and when the necessary legislation or regulations have been put into effect, to achieve a new stability and viability in the market. We, on the Liberal Democrat Benches, are concerned that although, taken in isolation, there may be some merit in the proposals, their impact upon the insurance market and employers will result in a series of unintended consequences. We must, therefore, establish whether these parts of the Bill will be implemented only after a proper assessment of the effect of any changes. That assessment should take into account the work of the Department for Work and Pensions and of the Treasury. Unless that is considered, the thinking that underpins and informs the Department of Health's approach, which is articulated in the regulatory impact assessment, is fundamentally unchanged by increasing evidence of a serious problem. This measure could exacerbate that 
 problem. For that reason, I hope that the Minister will address the concern about the Government's time scale for proceeding with this part of the Bill. 
 I share the view that this is the wrong time to implement this part of the Bill, and I agree with the comments made today. It is important that, set in the proper context, these measures could have a desirable outcome, such as a step change in the culture of health and safety in this country that is properly rewarded by our insurance system. That is not now the case. As the hon. Gentleman said, premiums for small businesses are not set in a way that truly reflects individual performance in managing risks and health and safety. In many cases, businesses are subject to a general view of the likely level of risk and, therefore, a general premium rate for those types of activity. Many people in the care sector who run small businesses are concerned that this measure will bring increased costs that they cannot manage or reduce through their own actions. That concern is a consequence of what is already happening, and those people—rightly—believe that it will be intensified by this part of the Bill.

Andrew Murrison: The hon. Gentleman's thesis is that these strictures will lead to an improvement in the health and safety culture. Will he reflect on the improvement in that culture in the past 25 years, and try to marry that with the rocketing level of insurance claims that have occurred during that time?

Paul Burstow: I shall do that briefly, otherwise I suspect that I shall venture too far from the debate. One concern is that some legislation has fostered and fuelled a more litigious approach to such issues. The response provoked in the insurance market has, in turn, led to increases in premiums. A cycle is ramping up costs through insurance without effectively rewarding those who adopt best practice and embed risk management approaches in the ways in which their organisations work.

Stephen McCabe: The hon. Member for Westbury (Dr. Murrison) said that this crisis developed in the past 25 years: that takes us back almost to the beginning of 1979. Is that connected to the performance of the party in power over that period?

Paul Burstow: I shall not be tempted down that path.

Andrew Murrison: Will the hon. Gentleman give way?

Paul Burstow: No. I shall not be tempted down that path by either side of the Committee. I am trying to ensure that my question is answered by the Minister. If that is a debate that Labour Members wish to have, they can exchange points when they make their speeches.
 I shall refer briefly to a couple of points that are made in the regulatory impact assessment and to some of the press commentary on that. I have a great deal of sympathy with some of the criticisms that have been made of the regulatory impact assessment process. It lacks transparency; it demonstrates a process that lacks independence. It also calls into question whether the Departments that are involved in legislation can 
 meaningfully assess the impact of that legislation. Reading through this particular section of the regulatory impact assessment, it strikes me most forcefully that, although there has been a growing body of evidence of concern in the insurance market, the assessment makes only the most passing of references to that. It treats that concern as a second order issue that could be easily overridden by what it considers to be the merits of part 3 of the Bill. Paragraph 43 of the assessment acknowledges that the 
''Department of Health is aware that there are currently difficulties with Employers' Liability Compulsory Insurance''.
 Paragraph 43 goes on to talk about the review that is taking place, which has been described already. However, when the regulatory impact assessment summarises the results of consultation, it gives only a passing nod to the fact that the Department would have received substantial representations from insurers and from employer organisations about the proposals' impact. It seems to play that down significantly and play up the alleged benefits of going down this particular route. 
 I am not convinced that the regulatory impact assessment provides a safe basis on which one can judge whether part 3 really will have a beneficial effect. The real problem is that the Department of Health wishes to proceed with it. The Department was also seized of the need, in the words of the RIA, not to miss the opportunity to introduce legislation in this area. 
 It is a pity that the regulatory impact assessment did not consider the issue of timing. It would have been useful to have had timing discussed, given that it would have been a recognition of the work that was being done by other Departments. All that I can conclude from that is that these clauses—clause 137 in particular—form part of what I thought the Government were eager to move away from. They are part of a rather silo-like approach to thinking with regard to Government policy. The clauses have not really addressed satisfactorily the consequences of their implementation for the private sector, the insurance market, and so forth. 
 Those are my concerns about part 3. I agree with the sentiment that has been expressed that the timing is wrong. I know from my discussions with the care home sector for elderly people and—in some ways more so—with the care sector for children that there have been massive increases in premiums in those sectors for employers' liability. Figures of 500 per cent. and 600 per cent. have been mentioned in some cases, which is extraordinary. Premiums have been increased at incredibly short notice, and situations have arisen in which insurers have simply said, ''We are walking away from this sector; we are not prepared to insure any more.'' My concern is that, were this part of the Bill to have been implemented according to the timetable that the Government originally proposed, matters would have been made worse. What I need to hear, and I hope that the Minister can reassure me on this, is that the Government now recognise that fact. The Government need to be able to say what their timetable will be for introducing this part of the Bill, so that we can be clear about when it will impact on the industry, what that impact will be and how that 
 impact will relate to the measures that are being introduced by the DTI, the DWP and others. Those measures should mean a more comprehensive strategy to deal with problems that go well beyond the Department of Health's remit.

Andrew Murrison: It is a great pleasure to follow the hon. Member for Sutton and Cheam (Mr. Burstow). In response to the hon. Member for Birmingham, Hall Green (Mr. McCabe), who attempted to cast an unreasonable slur on the previous Conservative Administration's health and safety record, I should say that I was referring to the Health and Safety at Work etc. Act 1974. It is early in the morning, and hon. Members must forgive me; I said 25 years when I should have said 29 years. I will have to check in my history books, but I suspect that that Act was passed in January 1974. I am sure that the hon. Gentleman is well aware of its provenance.
 I am very concerned that clause 137 seems to be a me-too clause; it allows the NHS to ride on the back of the litigation culture that has built up in this country. The NHS is saying, ''These folks are getting all this dosh, and we should have some as well.'' That is entirely unhelpful. It also begs the question: why only the NHS? Why should not a whole raft of public bodies, such as those that deal with social services, social security and so on, receive money also? It is unhelpful to consider the NHS in isolation. This provision will open up the door for other organisations, public and private, to say, ''Me, too, please,'' and request some of that money, with all the implications that brings, especially for the small and medium-sized enterprises that exist in all our constituencies. 
 I am not clear about how much this will cost in the long term, or how much will end up in the coffers of the NHS. I suspect that some organisations and businesses in this country will say, ''Fair do's. If this approach will raise lots of money for the NHS then, philanthropists that we are, we will cough up.'' However, the suspicion is that a great deal of that money will be spent on transaction costs of one sort or another. I should be grateful if the Minister could reflect on that; I am interested to know whether he has worked out where all that money will end up. 
 The clause specifically mentions ''a person'', and that worries me. So far we have talked about businesses and organisations, but individuals also have liability of sorts, and they might find that their insurance companies end up underwriting a great deal of that. I would be grateful if the Minister could comment on that. Of course, at the forefront of our minds is the case of farmer Martin, who may face a claim for the damage that occurred to a certain person while he was on his property. 
 Mindful of your stricture about repetition, Mr. Griffiths, I have raised just a few issues. I would be grateful if the Minister could address some, or all, of them.

Evan Harris: I hope that you received my message, Mr. Griffiths, that I would be late due to a problem
 with the trains. I will take that matter up with the Secretary of State for Scotland. I am conscious of your strictures about repetition. I have had a full briefing on the start of the speech from the hon. Member for Epsom and Ewell, and I assure him that we on these Benches agree with his analysis.
 I wish to raise a couple of points. The first relates to the point made by my hon. Friend the Member for Sutton and Cheam about the timing of this matter. He did not specifically refer to a DTI Minister, but in a written answer on 5 June to my hon. Friend the Member for Weston-super-Mare (Brian Cotter), the Under-Secretary of State for Trade and Industry, the hon. Member for Edinburgh, South (Nigel Griffiths) said: 
''I know that businesses and business organisations are concerned about the possible impact on insurance costs of the Health and Social Care Bill's provisions on NHS cost recovery. I have represented these concerns to the Department of Health, and as a result the Government has decided that the provisions in the Bill will not be commenced before the outcome of further work on the Employers' Liability Insurance system is known.''—[Official Report, 5 June 2003; Vol. 406, c. 528–29W.]
 I would be grateful if the Minister could put flesh on that answer—over what time period were those representations made; what were the nature of those discussions; and what does he understand to be the outcome of further work on employers' liability insurance? Does that refer to the implementation of any recommendations that may be proposed, or does it merely refer to the publication of the final report? It is critical that that question is answered, especially for businesses, which must make plans accordingly. 
 My second point concerns the general direction that the Government are taking, because they, and the Minister here today, often make the point that they are committed to a comprehensive health service that is free at the point of delivery and funded from general taxation. This is not a way of funding the health service from general taxation. Indeed, there is a creeping towards non-general taxation ways of funding the health service. 
 There may be merits in this scheme; however, we do not see them at the moment and we will oppose this part of the Bill. Nevertheless, assuming that there are merits, is it not right that the Government should be more open and honest about their intentions as regards these clauses and state that they are moving, to a certain extent, away from general taxation or even national insurance contributions as a way of funding the health service and towards other ways of doing so. If the Government were more open, clear and transparent about the matter it would deal with one of our criticisms. 
 Effectively this is a stealth tax for another stealth tax to help fund the health service. Whatever its merits, it is not satisfactory because it is being carried out stealthily as far as the general public are concerned. It is a double stealth tax, because there will be an increase in insurance premiums, and there is an insurance premium tax. Therefore there will be a double taking of tax from businesses—a double stealth tax—and that is taking the ability to tax stealthily to a new peak. 
 My third point concerns what will happen to companies that do not have insurance, even though it is compulsory, and would therefore be trading unlawfully. Is it the Minister's intention that it would be claims against such companies that would make them go insolvent or is the Government aiming to have a better inspection system for employers' liability insurance? It does not seem to be a sensible way of dealing with companies trading without insurance for that problem to be triggered by claims against them under this scheme. 
 There are also problems with the market in employers' liability insurance; very few underwriters are willing and able to provide it. If the cost of employers' liability insurance rises due to the new measures, is there not a danger that the situation could get worse? Do the Government have a contingency plan if the proposals adversely affect competition within the insurance industry or if companies are unable to find a policy for insurance that the Government have made compulsory? 
 My final question on this issue concerns what happens if insurance companies set a limit on how much they will pay out as a result of a claim and the costs sought under such a claim are greater than that limit. Does that situation not leave companies or organisations uninsured for what may be substantial costs, particularly, as we will discuss, because the costs do not appear to be limited? The Government's record on the road traffic NHS charges approach shows that insurance company charges have risen significantly since those measures were introduced. We will have other questions on the detail of these measures, and Liberal Democrats will support amendment No. 626 for the reasons given earlier by the hon. Member for Epsom and Ewell.

John Hutton: This has been a thoughtful and serious debate, and I will respond in a similar fashion to the points raised.
 Broadly, it would be true to say that two types of argument have been heard today. The first was an objection in principle, which we heard from the hon. Member for Epsom and Ewell. We then heard a hybrid version of that argument from the two Liberal Democrats who spoke, which seemed to be an objection based partly on principle, but paraphrased, as ever, with the inevitable Liberal Democrat comment that this is not the right time to be doing this. We are all familiar with that type of approach. 
 First, I will deal with the arguments about principle, which are the more substantive of the two. I will then deal with the more operational or pragmatic issues, such as how much will be raised, when we will introduce the provisions, what the distribution will be—the hon. Member for Westbury was concerned about that—and the administrative costs. 
 As regards the arguments of substance about principle, it is useful to base comments on the Law Commission's consultation paper in 1996, which floated the proposition that it should be right in principle for the NHS to be able to recover the costs of treating people who have been injured because of the 
 actions of others. The Law Commission set out clearly several arguments why that principle should apply. 
 However, it is also worth reminding ourselves that, contrary to what the hon. Member for Epson and Ewell said, this principle is not new. The NHS has always been able to recover the costs of treating the victims of road traffic accidents from insurance. We must remember that the legislation would repeal the Road Traffic (NHS Charges) Act 1999, and that would also be subsumed under the general provisions of this part of the Bill. 
 Until the hon. Gentleman spoke, I had understood that Her Majesty's Opposition supported the provisions, because during all of their years in office, they implemented them without apparently objecting to them in principle. Will the hon. Gentleman clarify whether the Opposition are in favour of those provisions as they apply to road traffic accident victims? The principle is essentially the same. If someone has committed a wrong, why should the taxpayer be responsible for subsidising, or partly subsidising, the cost that that wrongdoer would otherwise have to pay to meet the full extent of his or her liability to the person who has been injured? That is the basic principle that we are considering. 
 If we were to take the hon. Gentleman's advice and delete this part of the Bill, we would perpetuate a system in which the NHS, and therefore the taxpayer, would discharge part of the liability to these people. That would allow those who cause injuries to others to enrich themselves unjustifiably at the taxpayer's, and particularly the NHS's, expense. That cannot be right. It is in stark contrast to the treatment that private health care provides, as that can be recovered as part of any plaintiff 's claim for loss and cost recovery. That is the landscape of the argument. 
 I have heard what both the Liberal Democrats and the Conservatives have said, and I am not surprised they have decided to oppose the provision. That is the easy thing for them to do. There is a lot of legitimate concern, with which I will deal shortly, about how those provisions would apply, but opposing the provisions is to sell the pass. The national interest of the taxpayer is the issue. We must ask whether it is right in principle that we, as taxpayers, should fund the costs of treating people who have been injured as a result of the negligence of others. It is not a new argument; it has been applied and resolved before in relation to road traffic accident victims. This part of the Bill extends that principle more widely to people who have been injured. However, the arguments underpinning that principle remain valid and were set out effectively in the Law Commission's proposals in 1996.

Patsy Calton: I understand the Minister's point about principle, but has he looked at the pragmatic side of the argument or assessed the costs of introducing this scheme?

John Hutton: Of course I have looked at the cost of introducing the scheme, and that is set out in the regulatory impact assessment, a copy of which and I shall send to the hon. Lady.
 However, we must look at the principle as well as the practical operational issues, and I shall come on to those. I have explained why I think that this part of the Bill is important. The principle is crucial, and it is not right for the NHS to subsidise the treatment costs for those who have been injured because of the negligence of others. 
 However, there are two other important arguments regarding principle that we should not gloss over. If we were to take the Opposition's advice, we would be perpetuating anomalies, and that is not right either. The costs of treating road traffic accident victims would continue to be recoverable because the 1999 legislation would remain effective if these provisions are removed from the Bill. However, we would not be able to cover the costs of treating people who have been injured at work. Other than his pragmatic objection about cost, I have not heard from the hon. Gentleman reasons why that could not, or should not, be justified. There is no public policy basis for the hon. Gentleman's objection to these clauses.

Chris Grayling: The Minister keeps using the word ''injury''. What exactly does he mean by ''injury''? One of the concerns raised relates to long-term chronic conditions.

John Hutton: This part of the Bill does not cover long-term chronic conditions. We have set out our arguments as to why we did not want to go down that road, and I shall rehearse them later if that would be of benefit to the hon. Gentleman.

Chris Grayling: In that case, is repetitive strain injury an injury or a chronic condition?

John Hutton: RSI is an injury. The hon. Gentleman, however, referred to illnesses such as asbestosis. That is a chronic condition, and the Bill is not intended to cover such claims. The Bill was drafted with that in mind, and parliamentary counsel was aware of what we were trying to achieve.
 The principle is important: it is not fair that the NHS should subsidise, as it currently does, the treatment costs of people injured, for example, at work or in a public liability situation. There are anomalies and, were we to take the hon. Gentleman's advice and delete those provisions from the Bill, provisions for the recovery of costs in respect of victims of road traffic accidents would still exist. 
 Finally, although I wish to inject some caution into the argument, this is an important point. To take the hon. Gentleman's advice would remove a potentially useful encouragement to improve health and safety in the workplace. I accept that it is notoriously difficult to quantify any potential gain from this type of provision, but the hon. Gentleman discounted the possibility that the Bill offers any gain at all, and that is a fundamental mistake. I cannot quantify the provision's precise impact on improvements in health and safety, but the Health and Safety Executive believes that it is the right thing to do. The hon. Gentleman should not, perhaps, be so quick to dismiss that view.

Andrew Lansley: Following the Law Commission report and the introduction of the road traffic accident compensation scheme, in last year's Budget—implemented this year—the Chancellor required that business pay additional national insurance in respect of employees explicitly to purchase services from the NHS. Before moving away from points of principle, will the Minister comment on that? Does he not accept that the situation, even in principle, has changed in that the business community feels that it is being asked particularly to buy NHS services that were previously funded by general taxation and funded by the business community only in a more generic sense?

John Hutton: The Chancellor made the right decision in relation to finding additional resources for the NHS, and the hon. Gentleman voted against that. However, we are not dealing with a like-for-like argument. The Government accept that it is right that, through general taxation, additional resources should be made available to the NHS. Perhaps the Conservative party has a different view. We are concerned with cases in which someone has caused an injury to another person and, as a result, the NHS has an additional burden and costs to bear in the provision of treatment for that individual. That is over and above the service that is otherwise available to the public.
 The hon. Gentleman has made a debating point, and that is perfectly fair. However, the issue of principle transcends his argument. The matter concerns, for example, who should ultimately bear the cost of someone's negligence. Should it be the taxpayers, as currently happens, or should it be whoever was responsible for causing the injury? Our decision on where the costs should lie is clear.

Gary Streeter: My point is important and probably finely balanced. Whether the Minister is right or wrong on public policy, does he not accept that an unintended consequence of this measure will be that the cost to defendants' insurance companies will rise? Plaintiffs will still want their reward, but defendants will pay that reward plus the cost of reimbursing the NHS. The cost of premiums is, therefore, bound to rise. Does the Minister not therefore accept that, although it may be right in public policy, it will have an unintended consequence, as my hon. Friend, the Member for Epsom and Ewell outlined, and knock-on effects for business throughout the country?

John Hutton: I am well aware of those concerns, and I shall return to costs in a moment. However, we are still dealing with the issue of principle, which is an area of contest between both sides of the Committee.
 Those are the three arguments why, in principle, this is the right thing to do. The argument is not new: it dates from 1996 and the publication of the Law Commission's consultation paper, which received overwhelming endorsement from those who responded to it. I am sure that there are legitimate concerns, particularly on the parts of small businesses, about the impact of the changes, and I turn my remarks to those issues. 
 The hon. Member for Sutton and Cheam and others referred to an answer given by my hon. Friend, the Member for Edinburgh, South to a recent parliamentary question. It is true—this has always been the Government's view—that we will not move to implement these provisions until after a proper study of the full report from the Department for Work and Pensions on employers' compulsory liability insurance, which will be available in the autumn. We will not rush ahead and implement these provisions until we have considered the report's recommendations carefully. As the hon. Gentleman rightly said, we want to find the right method for securing the long-term viability and sustainability of this insurance market. 
 It is not the Government's intention that these provisions should destabilise the long-term market for employers' compulsory liability insurance. It is important that employers have access to affordable long-term insurance products in this market area, as it benefits all our constituents.

Chris Grayling: I am glad to have the Minister's assurances on that point. However, what happens if the framework that the DWP eventually proposes for employers' compulsory liability insurance does not fit exactly with the model set out in the Bill? Are we not putting the cart before the horse? Should we not return to this issue and include a structure that works with what the DWP propose, rather than anticipating the matter and then later finding that we have got it wrong?

John Hutton: We will have to wait to see what is in the DWP's report. That will inform the decision on how to proceed.
 In recent years, we have been over this ground very carefully, particularly since the introduction of the Road Traffic (NHS Charges) Act, upon which this part of the Bill is based. The structure in the Bill for introducing such a scheme represent the most cost-effective way of doing so. 
 The hon. Member for Westbury asked how the resources would be distributed. I have made the case that the measure is cost effective. The road traffic scheme recovers £100 million a year for the NHS. The figure was £4 million or £5 million a year—perhaps slightly more—before we introduced the scheme. The administrative cost of recovering that £100 million is only £2 million per year, or 2 per cent. It is a very good system for maximising the benefit for the NHS front line, which receives the benefits, and it is for the NHS to decide how the money is used. If a hospital in the hon. Gentleman's constituency is treating a large number of road traffic accident victims and has put in a claim for £1.5 million, the money would go straight back to the acute trust for its own use in supporting NHS services. It is a cost-effective scheme. 
 In the autumn, we must take into account the recommendations of the DWP report. However, I am convinced that if we implement the provisions we will have the best and most cost-effective scheme, which will minimise administrative costs and maximise the benefits to the NHS in the process.

Paul Burstow: When considering the DWP's work and its forthcoming report, will the Minister advise
 whether, as part of that programme of work, the DWP will specifically consider the implementation of this part of the Bill and how its implications can be ameliorated or incorporated into wider reforms that might arise from that work?

John Hutton: I do not want to anticipate the DWP's report. These are matters for the Department of Trade and Industry, the Department of Work and Pensions and Ministers in the Department of Health to reflect upon carefully. My point is that we want to reflect carefully on the evidence and information about the right way to proceed before we press the button to implement the provisions. We are sensitive and understanding about the concerns raised by small businesses about these provisions. However, we should not be under any illusions. If we take the hon. Gentleman's advice and reject the provisions, the cost of treating these people still has to be borne—currently it is being borne by the taxpayer. In the main, we are talking about cases where there has been an allegation of negligence and liability—not necessarily accepted—and a payment has ensued because a person has been injured because of someone else's actions. The fundamental issue to be decided, having weighed up the arguments over the costs and administrative inconvenience of the provisions is where, on balance, the costs should fairly and properly be borne.

George Young: The Minister rightly referred to the Law Commission's recommendation, which was that the scheme should be extended, but only after a cost-benefit analysis, and he quoted from the Road Traffic (NHS Charges) Act and said that £1.9 million is needed to recover £100 million. However, the notes say:
''The Department of Health is currently discussing the costs of administering the extended scheme with the Department for Work and Pensions and an estimate is expected shortly.''
 Can the Minister tell us the estimated figure for extending the scheme? It may be very expensive and the administration costs could be high, given that there are 93,000 cases on employers' liability alone, without including those for public liability.

John Hutton: In broad terms, we expect the administration costs to be similar to those of the RTA scheme, which costs £2 million to administer. That would be a ballpark figure for the administration costs of the injury costs recovery scheme, which is a wider scheme. Clearly, there will be more claims being processed in the system, and that is where the principal costs will arise. As I said to the right hon. Gentleman and the Committee earlier, we have chosen a broadly similar model for carrying forward the implementation of the extended scheme because the scheme administered by the compensation recovery unit has proven itself to be an effective and cost-effective way of raising significant sums of money.
 The hon. Member for Epsom and Ewell said that £150 million was an insignificant amount of money. It is not, and it is a mistake for him to say so. Many trusts would welcome this potential source of income, 
 and it would allow them to address a variety of local priorities.

Chris Grayling: Surely the Minister will recognise that £100 million represents one tenth of 1 per cent. of the NHS budget, whereas £100 million levied from the small business sector would mean the difference between profit and loss for many small businesses.

John Hutton: Of course I recognise that. It is a mistake for the hon. Gentleman to assume that the £150 million will come from the small business sector. That is not how the scheme will operate in practice, because many businesses—not just small businesses—will be affected by it. We do not need to dwell on the point. All members of the Committee know that £150 million is not an insignificant sum. If I were to stand on the Floor of the House of Commons and brush aside £150 million as being insignificant, I could predict the noise that would come from those sitting on the Opposition Benches. Let us therefore be fair and balanced about it. I agree, in the context of a budget that will rise to almost £100 billion, that it is a relatively small amount, but one has to take into account the fact that that money is distributed directly to acute trusts. Last year, under the road traffic accident compensation scheme, one acute trust recovered £1.3 million through the compensation recovery unit. That is a large amount for an individual acute trust to receive as an additional payment.

Patsy Calton: May I seek clarification in relation to my earlier intervention? I understand from the regulatory impact assessment that about £152 million is expected to be recovered. That rough ballpark figure comprises some £76 million from employers' liability and a similar amount from public liability. Point 6 on page 25 of the regulatory impact assessment states:
''The total cost to the NHS in dealing with these cases is estimated to be in the region of £140 to £150 million.''
 What does ''in dealing with'' mean?

John Hutton: I am glad that the hon. Lady has found the regulatory impact assessment, and I am delighted that she is now referring to it. We can deal with those issues when we come to the amendments that relate to them.
 We have been over the ground and there is an issue of principle to be decided on. The cost of implementing the scheme is a perfectly fair and legitimate issue. I have sought to convey the Government's view to the Committee that we shall not move to implement such provisions until we have had the opportunity to look at the Department for Work and Pensions' final report and to assess its likely impact on the employers' liability compulsory insurance market.

Gary Streeter: If, having completed the analysis, the DWP report and the possible cost to the wider insurance market and the beneficiaries are found to be negative, might the Minister decide not to introduce the scheme?

John Hutton: We shall cross that bridge when we come to it. For obvious reasons, I do not want to answer yes or no to that question, and I am sure that the hon. Gentleman will understand. The issue is obvious, and we have made it clear that we will not implement the provisions unless we are sure that it is right to do so. Even though I said that I would not answer yes or no, I think that I have just done so.
 We should not lose sight of the fact that the hon. Member for Epsom and Ewell moved amendment No. 626 to clause 137. I suggest that he did that to launch his cause célèbre, but it is a poor amendment and not one that I would recommend my hon. Friends to accept. The hon. Gentleman has obviously not had a proper look at schedule 9. It would be a bureaucratic stupidity for a hospital to have to pay NHS charges to itself if it was both the compensator and the hospital providing treatment, which is why schedule 9 specifically rules that out. It would result in a paper-chase, and we do not want the NHS to become involved in that. 
 There are other difficulties with the hon. Gentleman's amendment, particularly with its scope, range and the question of whom it would cover. As it stands, the amendment would exclude from the NHS cost recovery scheme any compensation payment made by any NHS body or NHS employee, including those made by NHS employees in a personal capacity as a tort-feasor. I cannot understand whether the hon. Gentleman wants that to happen. 
 The amendment would remove from the scheme not only clinical negligence compensation payments, but compensation paid to NHS staff under employers' liability and payments made to ordinary members of the public, for example, to visitors who received compensation under the NHS's public liability insurance. Given that the argument is that the tort-feasor should not have his or her liability subsidised by the taxpayer, that same argument should apply to the NHS as it does to any other employer. It would not be right if the NHS as an employer could escape its liability, but another rule applied to everyone else. How would small businesses react to the country's largest employer being exempt from that liability when they would have to face it? I do not think that is what the hon. Gentleman had in mind, and that is why I cannot accept his amendment.

Chris Grayling: We have had a useful and helpful debate, and I am grateful to the Minister for many of his points of clarification. Many of the individual issues will be dealt with when discussing the relevant amendments.
 The Minister may feel that the wording of the amendment is not appropriate, but I do not think that he has truly addressed the issue of medical practitioners. I will set out one concern raised by the Medical Protection Society. It states: 
''When the Department of Health originally announced its intention to recover NHS hospital costs it stated two objectives:
1. To provide better hospital services for all UK residents.
2. To encourage organisations, companies and individuals to become more aware of their responsibilities and take active steps to reduce the risk of causing injury to third parties.
Including clinical negligence claims in the scope of the proposal will achieve neither objective.
Doctors are already striving, in difficult conditions, to provide good hospital and community health services, this proposal is likely adversely to affect their morale.''
 I accept that schedule 9 is designed to mitigate the paper-chase, as the Minister put it, but he must recognise that, under the Bill, it is perfectly possible for different parts of the NHS to end up in a process of cost recovery against each other. As far as I can see, a GP is not exempt from payments under schedule 9, for example. My understanding is that, either because of an allegation of negligence against a GP or a GP's being required to recover costs against another part of the health service because he or she has treated a patient who has not been properly treated elsewhere, it is still perfectly practical, and almost certain, that the GP concerned will be involved in a process of cost recovery. The Minister can intervene if I am wrong about that, but I cannot see why that would not be the case. 
 There is already a difficult situation in the NHS with clinical negligence claims becoming more of a problem for medical practitioners. Serious debate is ongoing, and rightly so, about the possibility of a no-blame compensation system. In the midst of that, it would be nonsense to introduce a system that would require medical practitioners in one part of the health service to recover costs from medical practitioners in another. Surely that cannot be right. The Minister has not intervened to tell me that I am wrong.

John Hutton: The scheme is designed to recover the costs of treating people in hospitals, so GPs will not be involved in that. I understand the hon. Gentleman's point in relation to the possibility of an acute trust being recompensed for the cost of treating somebody who has been injured as a result of a negligent operation performed in the private sector or even in another part of the NHS, but the issue is essentially one of principle. Why should someone who has done something negligently, whether in the NHS or any other business, be exempt from the costs of dealing with the consequences and have their liability discharged as a public subsidy by the taxpayer? That argument applies to the NHS as much as it applies to any other organisation in the country.

Chris Grayling: I have had very recent experience of this issue. A constituent had an operation that went wrong and was subsequently put back on the road to recovery by a second NHS hospital. As of this moment, it is unclear why the operation went wrong and who was at fault.

John Hutton: With respect, the hon. Gentleman must understand the architecture of these parts of the Bill. There is no question of NHS cost recovery being an issue until and unless the compensator has actually made a payment. If it is not clear what has gone wrong, and no one has made a payment, there is no issue of NHS cost recovery arising. That would happen only when a payment has been made to compensate someone for his or her loss.

Chris Grayling: One must suspect, however, that there will be situations where financial pressures will come into play. One concern is that hospitals will
 pressurise patients into pursuing claims so that part of the costs can be recovered. Surely that is a danger.

John Hutton: With respect, I do not think that the hon. Gentleman has understood the Bill, or I may have misheard his question. Whether or not there is the possibility of NHS cost recovery will not affect the behaviour of the person who has been injured. It will not add or subtract from an individual's claim for compensation. This is a way of ensuring that NHS costs are not entirely borne by the NHS—and, therefore, the taxpayer—when someone has made a compensation claim as a result of being injured at work, for example. It will not affect at all the quantum of damages that the individual who has been injured receives, so there is no way that it could act as a spur or, in fact, as a deterrent to whether an action for compensation should be initiated in the courts.

Chris Grayling: I know that the Minister's confidence is not totally shared within the medical profession, and there is concern over a hospital's ability to recover some of its costs through a patient's claim. The Minister mentioned £1.3 million that comes through the road traffic accident scheme. There is a clear incentive for hospitals to encourage claims and recover money, and to provide information to support such claims. That will inevitably happen. There is concern that we will create a stronger culture of claims within the health service between different hospitals and different practitioners, and I cannot see that working to the benefit of the health service.

John Hutton: The hon. Gentleman needs to study more carefully the operation of existing compensation schemes for road traffic accident victims. He has said that this scheme would apply more widely to all injury cases, but there is no evidence of that relation to how the NHS recovers costs from road traffic accidents. I do not believe for a nanosecond that there is any evidence that that would happen under the personal injury cost recovery scheme. The NHS trust providing the treatment will have no knowledge of whether any payment is ever going to be made in relation to that treatment. Therefore, it has no built-in vested interest in encouraging a patient to pursue a legal action. It would be quite inappropriate for any NHS body to do that with any patient that it is treating. It is not the job of the NHS to give legal advice about potential personal injury claims to the people that it is treating, and I do not believe that any trust would do that.

Chris Grayling: I suspect that the reality is that a hospital treating a patient with whom something went wrong at another hospital has a perverse incentive to encourage that patient to make a claim, because it will recover part of the cost itself. The hospital treating after the event, and providing rehabilitation to the patient that suffered an adverse event elsewhere, will inevitably be asked by the patient: ''Whose fault was it, what went wrong, and should I claim?''

John Hutton: The hon. Gentleman's point would have more substance to it if in fact that was the view of the NHS, which it is not.

Chris Grayling: I know that these concerns have been raised by organisations other than the NHS and by doctors. I do not propose to push the matter to a
 vote because the point of the debate has been to establish the Minister's views. However, I hope that when he moves closer to implementing the provisions, should the Committee pass them, he will look carefully to ensure that the effect on the NHS is not to create distortions or an additional dimension to the existing compensation culture and that he will not stand in the way of measures that need to be taken to reduce rather than increase the compensation culture in the NHS. That said, I do not wish to press the amendment to a vote. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Chris Grayling: I beg to move amendment No. 603, in
clause 137, page 59, line 15, after 'injury', insert 'or chronic condition'.

Win Griffiths: With this it will be convenient to discuss amendment No. 611, in
clause 137, page 60, line 8, after second 'treatment', insert 
 'carried out within twelve months of the incident for which damages have been paid, or in the case of a chronic condition, of the most recent date in which the claimant had been employed by or otherwise associated with the defendant'.

Chris Grayling: To a small extent, the Minister has addressed the issue raised in amendment No. 603. These are probing amendments, designed to secure clarification and explanation from the Minister on the definition of an injury and a chronic condition and the time scale over which these measures apply.
 The Minister assured me that a chronic condition was not covered and that this measure relates purely to injury. I am grateful for that clarification, but I wish to press the Minister a little further. I am concerned that the definition may not be a clear-cut as he thinks, and I would like him to address a specific example. 
 I know of a person in an office—not in a factory—who was exposed to noxious cleaning chemicals. She sued her employer and won the case. The consequence of her exposure is a long-term one in that it has exacerbated respiratory and breathing conditions, which will be an ongoing problem and will represent a cost to the health service over a significant period. Is that an injury or a chronic condition? Is it or is it not covered by the Bill? 
 If a person falls and breaks his leg in the workplace or wherever and needs in-patient treatment for a couple of days, that is easy to define. 
 How do we define when an injury has a long-term health impact and is not simply cured within a bubble in the health service? How is that issue covered in the Bill? What is the time frame? Amendment No. 611 is a probing amendment, designed to allow the Minister to tell us the time frame in which this measure will be provided. 
 Let us suppose that somebody has an accident in the workplace and ends up as a paraplegic, needing 24-hour care. That person will receive nursing care supported by social services and funded, perhaps, through an insurance settlement. That person will also need ongoing support from the national health service 
 for the remainder of his or her life. How will the measure apply in such a situation where it is difficult to quantify the long-term cost to the national health service? The treatment will be provided over a long time, but it will be difficult to quantify how, when and why. 
 I should be grateful to the Minister for clarification of how the measure will work and over what time frame, as well as the definition of the divide between ''injury'' and ''chronic condition''. Legally, it may be difficult in many circumstances to define that dividing point.

Evan Harris: This is an interesting group of amendments, and we are grateful to the hon. Member for Epsom and Ewell for tabling them.
 Two broad questions have been raised. First, what is the definition of an ''injury'' and how does it differ from an ''industrial disease''? Secondly, to what extent and for how long does liability continue for the direct consequences of treating an injury when the dividing line may not be clear? Clearly, the answer relates to hospital costs, but as the hon. Gentleman mentioned, many costs, particularly for profound injuries, will accumulate over time because of repeat visits to hospital or prolonged stays in hospital. It is important that the Minister clarifies the principle and how it will work. 
 From the outset, the Government's intention has not been clear because the Department of Health consultation paper requested views on whether a recovery scheme should include ''disease'' as well as ''accidental injury''. The paper argued that diseases were included in the scheme, despite the fact that that could result in practical difficulties. Presumably, the principles mean that there should not be any arbitrary distinction between ''injury'' and ''disease'' because people should not profit from negligence and the public purse should not be embarrassed by that negligence. It is hard to see what justification there is for distinguishing between the two. The Bill's intention is not made clear in the explanatory notes and the regulatory impact assessment. 
 The Minister said that he would deal with this issue later; I look forward to his explanation. However, he suggested, the Bill must be correct because it was drafted by parliamentary counsel, who would not make a mistake. That is a rather circular argument. However, the regulatory impact assessment does not give consultees' responses on whether the Bill should deal simply with ''injury'' or should be extended to ''disease''. Although the regulatory impact assessment uses the terms ''accidents'' and ''diseases'' when it reports on the Law Commission's work, it later resorts to the terms ''accidents'', ''injuries'' and ''accidents and injuries'', and does not refer to ''diseases''. The Bill uses the term ''injuries''. However, I asked the House of Commons Library for its interpretation on first glance, and it thought that that would cover ''accidents'' and ''diseases'', unless otherwise defined. That is curious. 
 One question is whether there is a legitimate basis in principle for making the distinction and, regardless of 
 that, whether it will be possible to do so without significant dispute. I hope that the Government can reassure us on that, otherwise there will be more confusion than clarity on the very important area of the scope of the measure.

Andrew Murrison: I want to briefly underscore some of the points that have been made. Many injuries and chronic conditions are psychological or psychiatric, particularly those relating to the workplace. That is likely to increase dramatically in the context of conditions such as post-traumatic stress disorder, depression and anxiety related to occupation and work. It is very important to be clear on what we are talking about in this Bill. If we are to specify injuries, we need to know if they are injuries or conditions and whether they have the potential to become chronic. There must be no room for confusion. Including illnesses with injuries would dispel that confusion altogether. What consideration has the Minister given to doing that in the interests of clarity?

John Hutton: When we consulted on the introduction of the extended scheme, we specifically asked consultees whether the scheme ought to include industrial illnesses or diseases. I can tell the hon. Member for Oxford, West and Abingdon (Dr. Harris) that the overwhelming response from consultees was that it should not include disease or illnesses. Various reasons were given, but they all came down to concerns about how such a scheme would operate in practice, given the difficulties and delays with diagnosis, when symptoms are first reported and when, in many such cases, the clock would start to run.
 The majority of consultees felt that the operational and practical difficulties of including illnesses, injuries or diseases within the scope of such a cost recovery scheme only led to one sensible conclusion, which was that they should not be covered; it is our intention that they should not be covered by clause 137. 
 All three hon. Gentlemen asked what degree of confidence I had that such diseases or illnesses were not covered by the clause. I have a very high degree of confidence; the terms ''illness'' and ''disease'' are not included in clause 137 and we are talking about injuries. I accept that there is no statutory definition of injury in the Bill, but neither is there a statutory definition of injury in the Social Security (Recovery of Benefits) Act 1997, which was introduced by the previous Administration and refers to accidents, injuries or disease. The scope for recovery there is clearly much wider because it includes disease, as would be expected, and also broadly replicates the social security benefits system. In this context, we are talking about injuries and essentially about physical damage or hurt to an individual.

Evan Harris: The Minister used the example of the Social Security (Recovery of Benefits) Act 1997, but that does not need to define injury in isolation because it goes further and mentions injury as well as disease. Surely there is a clear need to define injury more closely when it is being dealt with in isolation. That is not the case with the 1997 Act, where anything directly related to an incident is covered.

John Hutton: Exactly the opposite is the case. Because we are not talking about illnesses or diseases, it is impossible to argue that they are covered by clause 137. We have specifically excluded them from the Bill; I do not think that it can be argued that because we have not referred to disease or illness, we have somehow inadvertently included them in the Bill.

Andrew Murrison: The Minister must define those if he is seeking to exclude them. The hon. Member for Oxford, West and Abingdon is quite right; there is no need for a definition otherwise, because we know what we are talking about. We are talking about illnesses, disease and accidents all together; they do not have to be defined separately. In the context of this Bill, what is to be excluded must be defined.

John Hutton: I should be very happy to have a seminar with the hon. Gentleman about parliamentary drafting at some point. However, the point that I am making—I am sorry if I have not made it clearly enough—is that we have excluded the terms ''illness'' and ''disease'' from the Bill; they are not mentioned. An exclusion is something to which one does not refer—[Interruption.] Of course, there is another way of doing it. We could say that ''injury'' does not include ''disease'' or ''illness''. For the sake of being friendly and nice to people, I will go away and think about whether we want a negative exclusion. However, we are labouring a minuscule point. There is no need to say that something has been excluded when it has already been excluded by the very wording of the Bill.

Evan Harris: I am grateful to the Minister for saying that he would think about that point. I do not intend for my criticisms to be unnecessarily destructive, but the Minister must understand that there will be difficult borderline cases. For example, an acute injury to a joint can lead to a chronic condition such as post-traumatic arthritis, which clearly is a result of the injury but is a disease process rather than an acute effect of the injury itself. The Minister's two problems are the exclusion and the difficulty in finding a definition. He has not even attempted to find a definition.

John Hutton: I genuinely do not have a problem with that. The hon. Gentleman confuses the NHS cost recovery scheme with a personal damages claim that could be the result of such an injury where the long-term costs for additional treatment would be subject to a compensation claim in court. We are talking about costs that the NHS can recover for an injury. In the hon. Gentleman's example, the NHS costs would be covered.
 The Opposition have been hugely confused about another issue in clause 137, which is the quantified, capped sum of money that the NHS can recover up to the point when the compensation payment is made, and not thereafter. The scheme ends when that payment is made. The long-term costs of treating a chronic disease that results from an injury—I accept that that can happen—is not the subject matter of the Bill. That is a matter for possible litigation and settlement in court, because those long-term care 
 costs will be the proper responsibility of the tortfeasor; that is not covered by clause 137. 
 The hon. Member for Epsom and Ewell has raised several perfectly fair and reasonable points, but he is fundamentally confused about clause 137, which concerns the capped sum of money that the NHS can recover up to the time of the compensation payment. The long-term medical care costs of chronic disease are not the subject matter of the Bill; they will be dealt with in the normal way in civil courts.

Chris Grayling: The Minister believes that there is a clear-cut divide, but I am not persuaded that that is the case. I gave him a specific example of someone who received compensation for exposure to industrial chemicals in the workplace. The exposure may have led to lung damage and caused mild asthma to develop into acute asthma, for which a compensation payment would be made and treatment would be received. It is odd for the timing of the cost recovery to be linked to the date of the compensation payment. The time scales involved could range from a rapid settlement within a week to five years of court action. That will create odd patterns of cost recovery. However, I am grateful to the Minister for outlining his intentions.

Evan Harris: The Minister looked disappointed when the hon. Member for Epsom and Ewell raised the possibility of a significant amount of time elapsing between injury and settlement. In the case that he cited, there may be multiple hospital admissions and it may be difficult for the administrator's system to gauge whether those were a result of the injury or whether, because a disease process was caused by injury, they were not covered. He has raised a significant point and I hope that the Minister will deal with it.

Chris Grayling: I do not expect the Minister to accede to requests from this side of the Committee. Whether the Government press ahead with the scheme depends, as the Minister said, on the outcome of the Department for Work and Pensions review of employers' liability compulsory insurance. However, I hope that he will consider this and possibly ask his legal advisers again to treble and quadruple-check the definition of the word ''injury''. Taking the Bill as currently drafted, the Minister risks creating a legal minefield in the future, which will be a distraction. There is a grey area with regard to the difference between an injury and an illness.
 I do not intend to press these amendments to a vote. I hope that the Minister and his advisers are listening and will give due consideration to the comments raised. We do not want health service professionals to be distracted by unnecessary legal processes because definitions were not made adequately in the Bill and thus had to be made in the courts. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn.

Chris Grayling: I beg to move amendment No. 604, in
clause 137, page 59, line 20, leave out subparagraphs (ii) and (iii).

Win Griffiths: With this it will be convenient to discuss the following:
 Amendment No. 606, in 
clause 137, page 59, line 32, leave out subparagraph (ii).
 Amendment No. 607, in 
clause 137, page 59, line 37, leave out subparagraph (ii).

Chris Grayling: These are probing amendments, which are designed to elicit from the Minister an explanation of the administrative costs and the amounts raised by claiming costs for ambulance services. This type of scheme already applies to road traffic victims. On reading the Bill, we on this side have grave doubts about whether the amounts of money that are likely to be recovered would make it worthwhile administering the scheme. I suspect that the cost of picking up an accident victim, taking him to the local hospital and then trying to reclaim the cost of doing so from the compensation settlement would risk being disproportionately high.
 The Minister may be able to persuade me otherwise, based on the experience of the current scheme, but it seems illogical. I can understand the logic of trying to recover a substantial amount of money on behalf of the hospital trust that has carried out the treatment. However, I am less persuaded that it would be cost effective to recover the cost of an ambulance trip from one side of town to the other when someone falls from his chair at work and breaks his leg. I hope that the Minister can reassure us that this aspect of the Bill is worth taking forward and will not impose additional and unnecessary bureaucracy on local health services.

Evan Harris: I thank the hon. Member for Epsom and Ewell for tabling these amendments, which enables us to probe whether a charge should be placed on ambulance services.
 I should like to raise a general point that relates to the provision of ambulance services. One of the main principles underlying the Government's approach to the Bill was the question of the unjust enrichment of a wrongdoer, as the Minister made clear. That is one of the key arguments, though it is not the only one. 
 The Law Commission explained what was meant by that expression, and its response is available in the Library. The Law Commission made a distinction between the role of the NHS as an emergency service and the role of other emergency services such as the police and fire brigade. The Law Commission argued that when the police or fire brigade are called in response to a tort, there is usually no alternative supplier of their services. That applies to ambulance services also; I am not aware of any private ambulance service lurking in the streets touting for business. That example is often used in discussions on the extent to which one can rely on the private sector for health care, because it is not rational to have rival ambulance services. 
 Given the market for private medical services, there is an alternative for NHS services that are provided when a tort has been committed. That service does not go very far in respect of emergency treatment, which will account for a significant amount of the cost that 
 the Minister is seeking to recover from the scheme. Nevertheless, we will take that as read for the moment. 
 The Law Commission is therefore able to argue that it is only in the case of the NHS—where there is a commercial alternative—that a wrongdoer is unjustly enriched as a result of drawing on public emergency services. Regardless of whether one agrees with that distinction, that part of the Bill is not clearly predicated or drawn from the Law Commission's recommendations, which the Government have prayed in aid. 
 When proposing legislation, the Government need not necessarily agree with everything that the Law Commission says; indeed, Governments generally ignore Law Commission reviews and leave them on the shelf. Nevertheless, it is important for the Government to explain why they feel that the principle of unjust enrichment can be ignored in relation to the ambulance service, especially given the questions raised by the hon. Member for Epsom and Ewell and the point made by my hon. Friend the Member for Cheadle (Mrs. Calton) that the return may be limited, given the bureaucracy around the provision of services from ambulance trusts. 
 The corollary of my comments is that if the Government believe that it is legitimate to ignore the principle of unjust enrichment in seeking to recover costs, what is to stop them from extending that to other emergency services? Perhaps the Minister can tell us the Government's thinking on that matter; after all, the public purse is still paying for someone else's negligence. 
 In many cases, someone could be found to pay the costs of the fire service or the police. Indeed, George Bain's recent review of the fire service recommended that fire brigades might recover money from motor insurers when they attend road accidents and for inappropriate use of their services. I do not want to stray too widely, and the Minster may claim that that is not his direct ministerial responsibility. However, as my argument on the amendment is on a point of principle, I should be grateful if the Minister clarified whether the Government had plans to extend that on principle, because it does not recognise the limitation of unjust enrichment as a necessary basis for underlying the use of such a measure.

John Hutton: I must make clear to the Committee that the proposal to recover some of the costs of transporting people who have been injured to hospital by ambulance is an extension of the scheme. Those costs are currently not covered by the road traffic accident compensation costs recovery scheme. We are proposing, for the reason articulated by the hon. Member for Oxford, West and Abingdon, that that is a cost to the NHS that should be recoverable in principle. We envisage that that the cost would be a flat rate of around £150, which would be recoverable for each ambulance. That would form part of the total cap that could be recoverable under that part of the Bill. The issue is fundamentally about principle.
 Given the previous debate, I am unlikely to convince anyone on the Benches opposite that it is right to bring ambulance services within the remit of 
 the scheme because of the principle of unjust enrichment, as the hon. Member for Oxford, West and Abingdon said. The hon. Member for Epsom and Ewell pointed out that we must ensure that the costs of administering the scheme do not outweigh its benefits; otherwise there would be precious little point in having it. We have done that. 
 As I said, the overall administrative costs of the RTA scheme are about 2 per cent. If that were crudely applied to the ambulance cost recovery charge, I believe that it would still be worthwhile. When the hon. Member for Oxford, West and Abingdon asked whether we intended to apply a similar cost recovery principle to the police and fire services, he was right to anticipate my answer that that is a matter for the Office of the Deputy Prime Minister and for my right hon. Friend the Home Secretary. However, I am not aware of any such plans.

Evan Harris: I argued that the Law Commission ruled that there was not unjust enrichment in the use of emergency services such as ambulance services because no one was saving money by forcing the victim to use taxpayer-funded services while having to pay a private provider, such as a private ambulance service, to collect the victim. I argued that unjust enrichment does not apply to ambulances services because there is no private market; yet, when dealing with that point, the Minister said that it was for precisely that reason that there was unjust enrichment. Have I made my point clearly? Can the principle be ignored for the purposes of recovery in respect of ambulance services?

John Hutton: My point—although it may not be my best one today—is that I agree. The issue is one of principle, and the cost recovery principle should apply. I concede that the argument about unjustifiable enrichment is—to use the language of the Liberal Democrats—partly true. However, there are private ambulances in the UK; in many cases, private hospitals have their own ambulance services. It is not true that no private ambulance service could be available in such a case. If I were arguing this point in court, I should like to finish with it as quickly as possible. I shall move on to something about which I feel better.
 Fundamentally, such a cost should be recoverable in principle, because it forms part of the overall provision of service. Since there is a small and limited private ambulance service in the country, it is not true for the hon. Gentleman to say that the Law Commission's argument does not apply. It does apply, and the principle of unjust enrichment could apply here. 
 The issue is not one of sophistry; I further concede that I do not rely entirely on the Law Commission's proposals. It is a matter of general principle whether this type of cost should fall within the ambit of the scheme. There is no wider precedent regarding fire or police services; the argument is specific to the NHS. The costs are proportionate and form part of a cap. 
 The hon. Member for Epsom and Ewell suggested that the matter was relatively cheap to administer, and 
 I have no reason to assume that that will not continue, through the compensation recovery unit, and cost-effectively through the compensation and recovery unit, which has shown an ability to operate the scheme in a highly efficient manner.

Chris Grayling: Does the Minister accept that the purpose of asking the question was to get him to check—or, if he has already checked, to respond—the amounts being recovered for an ambulance trip, as compared to the cost of recovering a transaction? He will accept that it may cost £100 to recover a £5,000 claim for an operation; if it costs £100 to recover the £150 costs of an ambulance trip, it may not be cost effective to apply the scheme to ambulances.

John Hutton: That might be true if the only process of cost recovery involved a specific claim via the ambulance trust. That will form part of the overall certificate of charges that the CRU will deal with regarding the particular injury, and ambulance costs will be part of that. The costs will be subsumed into the wider cost recovery of an individual's treatment. There could be several trips, each of which is potentially identifiable as a separate element—£150, for the sake of argument—of the total cap. The hon. Gentleman would have more of a point if the ambulance costs were administered separately, but we do not intend to do that.

Evan Harris: I am grateful for the opportunity to comment on what the Minister said. I am surprised that he accepted that I had a point; usually he does not acknowledge my points. Conceding that the argument on unjustified enrichment is not very strong from his point of view is no reason for giving up on the attempt to raise resources. It suggests that this is not really an attempt founded on the principles set out in the Law Commission report; rather it is an attempt to get as much money as possible from as many sources as possible.
 Although the Minister said that the other emergency services were not his responsibility and were not at issue in the Bill, his remarks—and the way in which he was happy to ignore some of the bases for extracting the money for hospital services where there is a private market—will send shivers down the spine of many people who have to take out insurance in other areas. This may be the beginning of an acknowledgement that there will be more widespread charging for the emergency services. That will need to be probed further in another place; perhaps on Second Reading in the Lords. With that in mind, I look forward to hearing the hon. Member for Epsom and Ewell's response.

Chris Grayling: I hate to disappoint the hon. Member for Oxford, West and Abingdon, but I have been reassured on the points that I made about the possibility of an excessively bureaucratic structure. As long as these claims are part of a whole, rather than individual ambulance claims, I would not wish to press the matter. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Chris Grayling: I beg to move amendment No. 608, in
clause 137, page 59, line 40, leave out 
 'including a payment in money's worth'.
 The amendment probes the use of the phrase 
''including a payment in money's worth''.
 The explanatory notes state that the subsection also provides for the return of compensation payments, including not only payments of money, but payments in money's worth, such as the provision of rehabilitation services and so on. 
 To take that very specific example, if an employee had an accident at work and damaged a limb, the employer could provide a long-term rehabilitation programme rather than make a compensation payment, provided that the employee found such a settlement acceptable. However, the wording of the clause implies that the NHS would still be able to recover funds from the overall settlement. I am not sure how that would work. If the settlement were entirely in kind—in money's worth—how could the NHS still seek to recover the costs of initial treatment in the hospital just after the accident took place? What would happen in such a situation? 
 Does the Minister envisage a provision whereby either the employer would be required by law to make an additional payment over and above the payment in money's worth, or the victim, having accepted a settlement in kind rather than in cash, would have to reimburse the NHS? This probing amendment is designed purely to help us to understand more clearly how the Minister expects the clause to work.

John Hutton: Clause 137(3) defines what will count as a compensation payment that would trigger liability for the payment of NHS charges. It provides that a payment will include not only a payment of money but, as the hon. Member for Epsom and Ewell said, a payment in money's worth. That means the provision to an injured person of something other than money that clearly has a monetary value. The hon. Gentleman is right to say that the clause would cover a case in which a compensator arranged for a person to be rehabilitated or to receive private health treatment, the cost of which the compensator would meet.
 By including 
''a payment in money's worth''
 in the definition of a compensation payment, those provisions mirror the definition of payment used for the purposes of benefit recovery in section 29 of the Social Security (Recovery of Benefits) Act 1997. It is right that the Bill should cover such compensation, because it relates to the fundamental principle that we are trying to develop and promote; if someone has caused someone else an injury and has made a payment to the injured person, whether in money or money's worth, there is liability. Therefore we should not accept the principle that the NHS should, on its own, meet that cost or help to discharge that potential tortfeasor's responsibilities. If we took the hon. Gentleman's argument to its logical conclusion—I accept that this is a probing amendment, but I want to 
 make this point none the less because it is my best one—

Simon Burns: I thought that the Minister's last one was his best.

John Hutton: No, that was not one of my best ones.
 If we were to take that argument to its logical conclusion, the hon. Gentleman would be designing a route map around the NHS cost recovery scheme. By his logic, there would be an incentive to offer money's worth, rather than money, and thus avoid the NHS cost recovery principle. That is not right; the principle is at stake here. If a person has caused another person an injury, the fact that the compensator makes a payment in money's worth rather than in money should not affect the ability of the NHS to recover its costs. 
 The vast majority of personal injury cases will be settled in terms of money, although it is conceivable that some will not. There is no argument for saying that we should build in such an anomaly, given that it is an argument in part 3 of the Bill that the compensator should have a residual liability to the NHS. If those who have caused the injury have made some form of compensation to the injured person, the NHS should, as a matter of principle, be able to recover its costs, whatever form the compensation takes. 
 In the example given, the measure would work in exactly the same way as in other cases where a money payment was made. The costs are calculated up to the moment of the compensation. They are subject to the cap of around £33,000, and they are made up of in-patient, out-patient and ambulance costs. They would be calculated in exactly the same way as if that person eventually received monetary compensation. The certificate of charges becomes active the moment that there is a settlement or compensation, and the costs can be recovered from the person who caused the injury. There is no particular complexity in a case where compensation takes the form of money's worth that separates it from cases where the compensation takes the form of money. The scheme will apply equally and precisely in the same way in relation to both.

Chris Grayling: The difference is that in a case where the compensation is in money's worth, there is no money; presumably, however, the NHS wants some money. Who would pay it?

John Hutton: With respect to the hon. Gentleman, that is not the point. The NHS has incurred costs in treating the person up to that moment. It does not make any difference whether the individual ''victim'' then gets a cash payment, because that does not affect the fact that the NHS has borne the burden of the costs of treating the person up to that moment. The compensator may make no money payment to the victim, but that should not affect the question of whether the NHS—if we accept that it should be in a position to recover its costs—should not then be able to recover its costs.

Chris Grayling: I am still not entirely convinced that the Minister has accepted the point in relation to a
 settlement that is entirely in money's worth. My guess is that, in reality, it would be impossible to do that. However, I am grateful for his clarification about the intention behind this part of the Bill, and I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Simon Burns: I beg to move amendment No. 609, in
clause 137, page 59, line 42, leave out 
 'or is alleged to be'.
 I wish to place on record from the outset that this is a probing amendment to seek clarification from the Minister on the meaning of this part of the Bill. Clause 137(3) states that ''compensation payment'' means a payment made 
''by or on behalf of a person who is, or is alleged to be, liable to any extent in respect of the injury''.
 Can the Minister explain, and put on the record, exactly what is meant by 
''or is alleged to be''?
 I think I know what it means, but the wording seems rather odd and could give rise to arguments and disputes.

John Hutton: As I explained when dealing with the previous amendment, clause 137(3) defines what is to count as a compensation payment that triggers liability for the payment of NHS charges. It is true that the definition covers payments both by those who have admitted liability or have been found be liable by the courts and by those alleged to be liable for the injury. The reference to alleged liability is necessary to cover the large number of personal injury cases that are settled by agreement without any formal decision on the issue of liability.
 I reassure the hon. Member for West Chelmsford (Mr. Burns) that it is not enough that an allegation has been made; there actually has to be a compensation payment. It is the fact of payment that triggers NHS cost recovery, not simply that an allegation of liability has been made. That is why we have included those words in the Bill.

Simon Burns: I am extremely grateful to the Minister for that clarification and beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Simon Burns: I beg to move amendment No. 610, in
clause 137, page 60, line 7, at end insert— 
 '(4A) Subsection (1) does not apply if the person making the payment is a not-for-profit organisation, charitable organisation or private sports club.'.
 I will make a plea, though I suspect that the Minister will not be tempted by it. Amendment No. 610 is a probing amendment. It seeks to exempt not-for-profit organisations, charitable organisations or private sports clubs from the payments required under clause 137(1) because, as was made clear in earlier debates—the Minister has not disputed the principle—subsection (1) will have an impact on insurance premiums and costs to organisations. The organisations listed in the amendment form a 
 particularly vulnerable group that is susceptible to increased costs because of the way in which they raise their money, and the impact of the changes could be significant to them. 
 The state creates exemptions in other areas to help non-profit and charitable organisations; for example, in council tax and the tax regime. Is the Minister prepared to consider devising a system whereby such organisations could benefit, totally or in part, with regard to the implications for them of this part of the Bill?

John Hutton: In the first part of the debate this morning, I made it clear that we would need to look very carefully at the final report of the Department for Work and Pensions on employers' compulsory liability insurance before deciding the best way to proceed with this part of the Bill. Many of the organisations described by the hon. Gentleman for West Chelmsford are employers and will have compulsory liability insurance. We must consider that in the context of the DWP report.
 The hon. Gentleman probably will not appreciate my comments, but it is important that we take part 3 of the Bill forward as a matter of principle. It is right that those who cause injury in our society through negligence should not evade the costs of the ensuing liability, including the cost of treating the victims of their negligence. 
 It is difficult to construct a case that because small organisations or local charities may be under financial pressure, they should be exempt; the general principle should apply equally to all, irrespective of their financial means. The problem can be dealt with by the purchase of effective liability insurance, and that is the route round the problem. We will consider that issue in the context of the DWP report.

Simon Burns: The Minister talks about the principle and I understand his point, but there are other areas where principles are involved and where society and the Government of the day have been prepared to bend those principles. For example, such organisations are liable for council tax, on the principle that they must make a financial contribution towards the services that the local authority provides. However, the Government have bent that principle by saying that, because of the nature of the organisations, they can pay a reduced level of council tax and business rates.

John Hutton: That has been done to reflect the wider social contribution that such organisations make, which the Government, and previous Governments, are right to recognise. However, we are discussing something quite different; the responsibility of those organisations for the consequences of their actions if, for example, members of the public came on to their premises and were injured. If one accepts the general principle that those organisations should face the consequences of that negligence, it is difficult to understand why, in this case, that logic does not apply to the recovery of NHS costs.
 The path down which the hon. Gentleman is treading is unprecedented, because the civil law does not make general exemptions for liability for the consequences of one's behaviour depending on the nature of the organisation. Charities have a legal entity and a legal personality, and they are responsible for the actions of their employees, as are companies. It would not be healthy to grant to those organisations exemptions from the wider applicability of those general, legal fundamentals that govern responsibility in society. 
 I am not making heavy weather of this; this is one aspect of that wider responsibility and not the be-all and end-all. However, it is not a good idea to try to place limitations on the legal responsibilities that those organisations have to members of the public, which is the logic of this argument.

Chris Grayling: Can I give the Minister an example to consider? Volunteers in the Riding for the Disabled Association charity do valuable work on a shoestring. In an environment in which young people—particularly young disabled people—ride horses, as sure as night follows day kids will fall off horses and get hurt. Surely the danger of imposing these measures on such a group places an additional burden on them. It is bound to increase the charity's insurance costs, and the charity might find it more difficult to continue to provide a worthwhile service, even if that service carried some risk.

John Hutton: I accept that point and, as I said, I am concerned about that argument. The proper place to deal with that is in the review of compulsory liability insurance that the Department for Work and Pensions is currently undertaking. I have given clear assurances today that we shall fully consider any recommendations contained in the report and its conclusions before deciding the best way to take forward the implementation of the scheme.

Evan Harris: I have listened carefully to what the Minister has said. Is it his understanding that the Bill is so structured that even if clause 137 is passed without amendment into primary legislation—based on the results of the Department for Work and Pension's review—he will be able to exempt certain organisations and employers from the provisions of regulations by amending schedule 9? It is not entirely clear from the structure of the Bill.

John Hutton: I need to take advice on that. Schedule 9 gives the Secretary of State powers to exempt certain payments from the NHS cost recovery scheme. I shall have to take advice as to whether that could, through regulations, cover certain types of organisations, but we do not want to do that. Here we are discussing a principle; should not the consequence of negligence, for example, be borne equally by everyone, irrespective of the legal nature of that entity? That is an important principle.
 The concern of the hon. Member for Epsom and Ewell is a repeat of his earlier argument. He is worried that part 3 of the Bill might produce further increases in the costs of public liability or employers' liability insurance. I am also aware of and concerned about that argument, as everyone here is. In the context of 
 how the argument has been presented to me, the best way to deal with it is to study carefully the DWP report and to look at what the market, the employers and the Government are saying about the long-term sustainability of liability insurance cover. 
 Obviously, there has been a significant rise in premiums, which is a concern to everyone. However, as the initial report from the DWP made clear, this is a market adjustment, not a market failure. It should be looked at in that context.

Evan Harris: I did not necessarily subscribe to the view a priori that certain employers should be exempted. However, the Minister may find it easier later to ensure that he has sufficient room for manoeuvre in terms of the date of the implementation of the measure—that is what the parliamentary answer referred to earlier gives—and to ensure that, without recourse to primary legislation, he is able to take a view on whether there may be a manoeuvre. Decisions will have to be made on what groups and employers can be made exempt from payment.

John Hutton: Schedule 9 allows us, if we want to, to make regulations to exempt certain organisations from payment. Therefore the power to exempt certain payments under schedule 9 is capable of being applied specifically to certain types of organisations. I am happy that the Bill is sufficiently flexible to deal with this point if we felt, in the light of the DWP review, that that was the right way to proceed with these organisations.
 It is not part of our current thinking—I have to be clear about this—to envisage exempting any particular type of organisation. However, the Bill is flexible enough to allow us to do that if we felt, in the light of the report, that that was the right way forward. I hope that on that basis, Opposition Members will feel that it is not necessary to press the amendment.

Simon Burns: I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Chris Grayling: I beg to move amendment No. 612, in
clause 137, page 60, line 45, at end add— 
 '(12) This section shall not apply until the Secretary of State has published a national tariff for all NHS treatments.'.
 This is the final amendment to this clause. We have had a valuable debate, and I only have three or four questions for the Minister. He will be aware that this is a probing amendment, designed to give us an opportunity to ask questions about the way in which the charging structure will operate. 
 Before I do that, Mr. Griffiths, I will trespass on your patience for one moment to say that I am grateful to the Minister for the clarifications that he has given us this morning on all the amendments. He has certainly done something to address my concerns. We still have differences of principle over this, but I am not minded this morning to press any votes on this section. I should like to take the Minister's comments away and digest them. I shall talk to one or two of the organisations that have raised concerns but shall 
 reserve our position as regards Report, because there are still fundamental differences of principle. However, I recognise that the Minister has given thoughtful responses to several of my concerns, and I do not want to sour the tone of that constructive interchange by having a confrontation at this moment. 
 The questions that I should like the Minister to address relate to the charging structure. The amendment refers to a tariff for all NHS treatments. We seek to establish from the Minister how he envisages the charging process working. How will we quantify the cost of treatment to a provider without some form of tariff system given the fact that, in today's NHS, most treatments are provided under a block contract rather than under a tariff system? 
 Earlier, the Minister referred to the Government's plans for tariffs for individual treatments. However, that system does not exist at present. How in reality will the NHS establish the cost of a treatment in order to put forward a certificate with a charge on it that can be presented to an insurance company if there is no tariff structure in place? 
 What happens with the establishment of tariffs and costs if a patient has required more than one stay in hospital, and in different hospitals? Will the system wrap all the charges together into one certificate, or will individual hospitals be able to put forward separate certificates charging for recovery? Will the overall ceiling apply to more than one certificate, or, theoretically, can there be many certificates with the same ceiling in the same claim? 
 With reference to the cost of treatment, will there be a minimum threshold, so that we do not end up with claims for absurd amounts? For situations in which the actual cost of delivering a treatment is relatively small and not sensibly cost effective to recover, will there be a minimum threshold for a claim to be made either through guidelines issued in the administration of the scheme or through another mechanism? 
 Lastly, in relation to Wales, how will the system of assessment and recovery of costs work between the NHS in Wales and the NHS in England in a situation in which treatment has been provided in two different places and, in the course of one compensation process, a Welsh NHS trust is seeking to recover costs from a trust in England and so forth? 
 I should be grateful if the Minister provided clarification on those four questions.

Win Griffiths: I call John Hutton.

John Hutton: You call me what, Mr. Griffiths? [Laughter.]
 Amendment No. 612 seeks to disapply clause 137 until the Secretary of State has published a national tariff for NHS treatment. National tariffs for all NHS treatments were published earlier this year but will not become mandatory for most hospital care until 2005–06. More than 550 national tariffs cover the full range of in-patient care. Earlier today, we had a debate about the cost-benefit analysis of operating such a scheme, and we have always been clear that we must be satisfied that the benefits of the pilot scheme are not 
 lost in the additional costs of administration and bureaucracy. We are satisfied that the current RTA victims scheme is precisely such a cost-effective scheme. As I said earlier, we will not use the 550 national tariffs to help to form the basis for the certificate of charges, because that would be a bureaucratic and complicated system to operate. At present, we use just two simple national tariffs, which are based on the average cost of treating people for traumatic injuries; that same system will be used for the extended scheme. 
 The first tariff will be the flat-rate charge for treatment without admission and will include a sum towards the cost of any subsequent attendances. The second tariff will be the daily rate charge for treatment with admission and will similarly include an element towards any follow-up appointments. The current scheme tariff is £526 per in-patient per day and £425 per out-patient; we envisage a charge of £150 per ambulance trip. That, basically, is how the tariff scheme will work. To apply the full 550 national tariffs for health reference groups—if that were the intention of the hon. Member for Epsom and Ewell—would be to inject massive bureaucracy into the scheme. We intend to operate the scheme on a simple two-tariff basis, which will make it easy and cost effective to administer for the compensation and recovery unit and for insurers and the NHS alike.

Evan Harris: Will the Minister clarify the basis on which those tariff charges might rise? The latest rise in the tariff for NHS road traffic accident charges was significantly greater not only than the rate of inflation, but than any measure of NHS inflation. That increase was well into double figures, and I am not aware of any consultation or of any set of principles or methodology that clarifies how quickly charges may rise after the initial charges have been set.

John Hutton: The rises that took effect this year were the first since the introduction of the scheme in 1999. The hon. Gentleman must take into consideration that the increase covers the first four years of the scheme, and he should not assume that there will be an annual uprating. However, we need to keep the two basic tariffs under review to ensure that they reflect the cost of treating patients in the NHS.

Simon Burns: What was the percentage increase?

John Hutton: I do not have that figure with me but I can give it to the hon. Gentleman later this afternoon if he would like to share it with the Committee.
 Any such scheme must have an in-built mechanism to allow the costs that can be recovered to reflect fairly the costs that have been incurred. Both the existing and extended schemes have that, and the tariff will be adjusted to reflect increases in NHS costs. 
 The current scheme has a simple tariff-based mechanism that is simple to administer and, as we know from previous debates, it is extremely cost effective, with administration costs in the region of 2 per cent. The Bill will apply that in-built facility to the wider scheme. 
 Clause 140(5) allows for the tariffs to be set in regulations, and we will certainly use those regulations to set out the details of how the tariffs will apply.

Chris Grayling: I am grateful to the Minister for that clarification; he has explained how this will work. I should like to raise briefly with the Minister the question of how the payment structure and the tariff system will work across England and Wales and whether there will be any differences between the two in the operation of that system.

John Hutton: Perhaps I can help the hon. Gentleman on that point. The existing RTA scheme applies to Wales. We have not envisaged any cross-border complexities or difficulties and do not expect such problems here. The cap relates to the total cost of treatment. I am advised that five hospitals could not submit five charges up to the cap. The cap is a ceiling. However, if I am wrong on that point, I will certainly get back to the hon. Gentleman.

Chris Grayling: In that case, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 137 ordered to stand part of the Bill.

Schedule 9 - (Recovery of NHS charges: exempted payments)

John Hutton: I beg to move amendment No. 585, in
schedule 9, page 125, line 23, at end insert 
 'or 
 ( ) Article 14 of the Criminal Justice (Northern Ireland) Order 1994 (S.I. 1994/2795 (N.I. 15)).'.

Win Griffiths: With this it will be convenient to discuss the following:
 Government amendments Nos. 586 and 587.

John Hutton: These amendments seek to ensure consistency of approach when handling payments made in all four countries of the United Kingdom. Under the existing RTA scheme, it was unnecessary to make provision for payments made under Northern Irish law as the scheme did not extend to Northern Ireland. However, the extension of the scheme to all types of personal injury means that it will now be entirely feasible that successful compensation claims could be made under Northern Irish law and attract NHS cost recovery charges.
 For example, let us say that someone from England visits Northern Ireland on business. While there, he suffer a serious injury when looking at industrial premises or inspecting a factory. The injured patient is stabilised in hospital in Northern Ireland but is then transferred home to England and spends a further couple of weeks in hospital here. He subsequently brings a claim against the company in Northern Ireland that owns the factory, and receives compensation. Under the expanded scheme, the company paying the compensation will also be liable to pay NHS charges for the injured person's stay in the English hospital. 
 That being the case, it is important to ensure that compensators in Northern Ireland are treated in exactly the same way as those in England, Wales and 
 Scotland. The simplest solution is to ensure that the relevant Northern Irish legislation is included in the Bill, and these amendments ensure that that is the case. Essentially, amendments Nos. 585, 586 and 587 disapply provisions in relation to fatal accidents and criminal compensation in Northern Ireland and cost-recovery principles so as to be consistent with the scheme in England, Wales and Scotland.

Simon Burns: I shall be brief. I am grateful to the Minister for explaining the situation with regard to Northern Ireland under amendments Nos. 585 and 586. However, amendment No. 587 deals with the order-making powers of the Government. The Minister and his former colleagues, who have now been posted to other areas, gave a commitment on three occasions—the first being at the outset of our proceedings—that since there are so many order-making and regulation-making powers in the latter half of the Bill in particular, they would do all that they could to provide us with briefings to explain what they anticipated these orders and regulations would do.

Win Griffiths: Order. The debate should concern the Northern Ireland issue and not this technical issue.

Simon Burns: I am grateful, Mr. Griffiths. I was trying to kill two birds with one stone. We would be grateful for some briefing.

John Hutton: I reassure the hon. Gentleman that amendments Nos. 586 and 587 do not create any new order-making powers on the part of Ministers. It is simply a reference to Northern Ireland legislation. I will table some information for Committee members about the regulation-making powers under the dental clauses of the Bill later today. I hope that that will be helpful to the Committee.
 Amendment agreed to. 
 Amendments made: No. 586, in 
schedule 9, page 126, line 19, at end insert— 
 '( ) in consequence of an action under the Fatal Accidents (Northern Ireland) Order 1977 (S.I. 1977/1251 (N.I. 18)), or'.
 No. 587, in 
schedule 9, page 126, line 21, after 'Act', insert 'or Order'.—[Mr. Hutton.]
 Schedule 9, as amended, agreed to. 
 It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order. 
 Adjourned till this day at half-past Two o'clock.